Tag Archives: NTIA

FCC Raises Inmate Calling Rates

In what would normally be an extraordinary action, but which is becoming commonplace, the FCC thumbed its nose at Congress and raised rates for telephone and video calls placed from jails and prisons.

The FCC under Jessica Rosenworcel issued new rules in 2024 that lowered prison calling rates that came as a result of the Martha Wright-Reed Fair and Just Communication Act, enacted by Congress. Earlier this year, the FCC put the rate reductions on hold and recently ruled to make the reversal of the law permanent.

The FCC was reacting to heavy lobbying from the handful of companies that specialize in providing prison calling, along with lobbying from jail and prison officials who benefit by sharing in the revenues from inmate calls. The new Congressional Act not only cut rates but also eliminated the payment of commissions to jails.

The FCC didn’t only raise calling rates. The new order adds a 2-cent facility fee to each call. The FCC rules now allow the prison carriers to add a fee to cover “safety and security’ costs. The FCC also created a new category of even higher rates for extremely small jails that house fewer than 50 inmates. Finally, the FCC now allows prison carriers to add a 6.7% increase to rates for inflation.

The new FCC rules kept a few of the provisions of the original Act. Carriers can’t pay commissions to jails and prisons from Interstate calling. The Act also eliminated a lot of ancillary fees that were charged mostly to families of inmates.

I call the ruling extraordinary because I can’t recall an FCC in the past that so blatantly decided to ignore a law passed by Congress. The only other time I recall the FCC having a major issue with a law was when Chairman Mark Fowler in the 1980s took exception to Congressional rules related to the Fairness Doctrine, although there might have been other instances. The FCC was created as an independent agency by Congress, and it’s assumed that the Agency is required to follow explicit laws enacted by Congress.

This is not the only federal agency ignoring Congress. NTIA, at the behest of the Administration, is refusing to award grants from the Digital Equity Act. The NTIA is also mulling over sending excess BEAD funds, called non-deployment funds, back to the Treasury. These actions are in direct violation of the funding rules created by the IIJA legislation that funded BEAD and Digital Equity.

The obvious party to address a rogue FCC and NTIA is Congress, but for now, they seem to be ceding power to the Executive branch. It’s possible that the Courts could act to make the FCC and the Administration follow the law. There was a recent lawsuit filed by NDIA that challenges the ability of the Administration and the NTIA to kill the Digital Equity Act.

There are also Supreme Court rulings over the last few years that seemingly make it more difficult for federal agencies to act on their own. The Supreme Court ruled in Loper Bright Enterprises v. Raimondo  to effectively end the Chevron deference and said that federal agencies are on shaky ground when they make decisions that are not explicitly directed by Congress. In the 2025 ruling, McLaughlin Chiropractic Associates, Inc. v. McKesson Corp., the Supreme Court ruled that Courts can more easily disagree with rulings made by federal agencies. It would seem those two court decisions provide a lot of ammunition for attacking the FCC decision on prison calling rates.

Justifying Cuts to BEAD

NTIA Assistant Secretary Arielle Roth recently made a speech at the Hudson Institute that outlined her policy positions related to reshaping the BEAD program. The changes to BEAD were initiated by Commerce Secretary Lutnick and are now being finalized and implemented by Roth. The bottom-line impact of the changes will be to cut the amount of spending from the BEAD grant program roughly in half, with the savings returned to the Treasury.

Roth says that the changes are not just about saving money. Her position is that the cuts being made are to make sure that the government doesn’t distort or sabotage the pace of technological innovation.  To quote Roth, When the government overspends or over-subsidizes a single technology, it doesn’t just waste funds; it warps the progress of innovation. Excessive subsidies crowd out private investment, slow down research and development, and delay technological progress. That’s counterproductive to BEAD’s mission, which is to close broadband gaps, not freeze technology in place. In a field as dynamic as broadband, minimizing distortion is critical, because in every case, the most significant breakthroughs in connecting rural Americans have come not from subsidies, but from technological innovation itself.

That’s an amazing policy position to take related to rural broadband. I’d like to put her position into a bigger perspective. Her argument is a good one related to the whole broadband industry. I don’t know anybody who would argue that the federal government should help to pick technology winners for the entire industry. The market today is taking care of that pretty well. Over the past several years, over 14.5 million customers have chosen to buy broadband from the FWA cellular companies, much to the dismay of the cable companies. A recent article said that major fiber overbuilders in urban and suburban markets are seeing penetration rates between 35% and 45%. Starlink has grown to have four million U.S. broadband customers. It seems like the overall market is working pretty well, being fueled by private capital and head-to-head competition.

But even there, the federal government can’t help itself from fiddling at least a little bit with the market. Congress recently directed the FCC to rework mid-band spectrum allocations to bring 600 megahertz of spectrum to auction. That action will benefit FWA cellular competition even more than cellular service. That’s what incessant lobbying and contributions from the cellular industry buy. But mostly, the government hasn’t been intervening in the broader broadband market.

Roth’s policy position falls flat when applied to the tiny world of BEAD. The BEAD grant program aims to bring broadband to the last 6 to 7 million locations that got left behind by the market. For the most part, the BEAD locations are the most remote or least dense areas where nobody has been willing to make private investments. Congress recognized this when they developed BEAD, and it’s still the market reality. Without a one-time grant subsidy, these locations will likely never see better broadband.

How BEAD grants are awarded is extremely important to the households that will get the broadband, along with the construction companies and vendors that will supply the materials and labor to implement the grants. A lot of rural people put effort into the BEAD process in the hopes of getting a generational broadband upgrade.

But the technology chosen for BEAD has almost zero impact on the bigger U.S. broadband market. It really doesn’t matter to the larger market if the BEAD money all goes for fiber or all goes for satellite. It’s absolutely impossible to make an argument with a straight face that the technologies chosen for BEAD will somehow “warp the progress of innovation” if it’s not done just right.

I know Assistant Secretary Roth is looking for a good argument for awarding all of the locations in a rural county to satellite instead of fiber – but this argument is not it. The truth is that the NTIA changes to BEAD are only about saving money. NTIA could have completed the BEAD grant award on the same timeline by deciding to spend the full $42.5 billion, but they chose not to. They whacked the spending in half and are now searching for a clever way to justify their choices. I can’t think of a more ludicrous argument than one that says that spending more BEAD money on fiber would somehow sabotage the overall pace of broadband technology innovation for the country.

Missed by BEAD

An article from the Advanced Communications Law and Policy Institute at the New York Law School claims that over 1 million locations were missed by the BEAD grants. They identified these as locations that are still shown as unserved and underserved on the FCC broadband maps, but which did not make it into the BEAD program.

ACLP also identified two other sources of locations that will likely not get broadband. They predict some BEAD defaults since a number of small and untested ISPs won sizable BEAD grants. They also believe there will continue to be defaults in other grant programs.

ACLP recommends that up to half of the $20 billion+ that will not be spent on BEAD grant be deposited into a BEAD Reserve Fund to be used to cover the shortfalls.

It’s a sensible idea, but unlikely to gain any momentum. It seems clear that NTIA wants to take credit for solving the rural broadband gap while also returning $20 billion to the U.S. Treasury. I can’t think of any mechanism that would allow NTIA to keep unspent monies alive once BEAD grants are awarded and NTIA makes a final announcement on non-deployment funds. The general consensus I’m hearing is that NTIA will award little or nothing to non-deployment funds.

I think ACLP is missing the bigger picture, and I think there are many millions more locations that should have rightfully been included in BEAD.

ACLP’s math starts with the assumption that the speeds reported to the FCC in the broadband maps are right. Anybody who has worked at a local level knows this is often not the case. There are a lot of ISPs that claim a speed of exactly 100/20 Mbps in the FCC maps, and I believe that millions of these locations have been falsely excluded from BEAD.

Each State had a BEAD map challenge that was supposed to result in an accurate map, but that process was largely a total bust. The map challenge rules made it much easier to exclude locations from the preliminary BEAD maps than add locations. The process of proving an ISP was overstating speed capabilities in the FCC maps was nearly impossible to comply with.

Additionally, NTIA declared that licensed fixed wireless was to be treated as served as long as speeds were reported at 100/20 Mbps. In many counties I worked with for the map challenges, it became obvious that reporting by some WISPs was a joke. I remember one WISP that drew an eleven-mile radius circle around every tower and claimed the ability to serve every place in that circle. Numerous WISPs used seven- and nine-mile circles and also claimed full coverage. The irony of the NTIA ruling was that the only requirement to block off big areas from BEAD was adding CBRS spectrum to the spectrum mix. Many WISPs tell me that CBRS is an unremarkable spectrum due to the small channel sizes.

The other big category of locations that could have been covered by BEAD was low-income MDUs. The BEAD legislation suggested that States attack this issue using non-deployment funds. The number of such locations is hard to identify because many MDUs show as served in the FCC map since there is fiber nearby. But an MDU is not served until somebody is willing to invest in the inside wiring needed to bring better broadband to residents.

My guess is that the number of locations missed by BEAD is likely 6 to 7 million, much higher than the number suggested by ACLP. I have no analytical basis for that guess other than I seem to find examples of places missed by BEAD in every community I dig deeply into.

At some point, this will all come clear as folks without good broadband continue to complain to their elected officials. RDOF was supposed to fix the digital divide. BEAD was supposed to solve it. Maybe the next time will be the charm, although I’m not taking any bets on it.

Technology Neutral

I cringe every time I see the term “technology neutral”. Over the last few years, NTIA has morphed the phrase into a euphemism to mean we should favor the cheapest technology over the best technology.

And it clearly is a euphemism meant to disguise the true nature of the broadband policy discussion from those not involved in the topic every day. Governments have gotten so good at developing such phrases that the euphemisms replace the right language and become common usage. We routinely hear phrases like revenue enhancement instead of tax increase, or negative growth instead of losses without fully realizing what is not being said.

The phrase technology neutral didn’t start as a euphemism. It comes from a policy paper issued during the Clinton Administration, “Framework for Global Electronic Commerce“, which used the term “technology-neutral” to warn that governments shouldn’t get involved in trying to steer the technology direction for the budding Internet industry. The Administration at the time believed that a hands-off market approach would best allow the Internet to develop. It turns out they were right.

It seems pretty clear that the term was tossed into the IIJA legislation as a bone for WISPs. They badly wanted to participate in BEAD and used the term technology-neutral to plant the idea that all technologies that could deliver speeds of 100/20 Mbps were all equivalent. Until Tarana came out with much faster radios, the fixed wireless technology at the time didn’t deserve to be considered for long-term grants – and sure enough, five years later, the older radios have already joined DSL and other older technologies in the obsolete technology trash bin.

I’ve been searching for a good analogy for the current use of technology neutral and think I have one. Consider a tiny village that is not connected to the power grid. There is a wide range of technology solutions for providing homes with heat and light. The village could be given a self-sufficient solar power farm. They could be connected to a nuclear power plant. They could be given an obsolete coal-powered plant being decommissioned from somewhere else. Each home could be given a gas generator. They could be provided with the low-tech option of fireplaces and axes to chop firewood.

The various technology choices are clearly different in terms of cost and effectiveness. The NTIA technology neutral position would say that all of these options are acceptable, as long as they deliver heat and light to the homes today and also will deliver heat and light in the foreseeable future. If there were a government grant to bring heat and light to the towns that operated under the NTIA rules, the decision would be made on cost, since all of the solutions are considered to be technology-neutral. I don’t think the rural residents would be thrilled with their government-subsidized axes.

Don’t mistake this as a rant for building fiber instead of other broadband technologies. In the example, it would be extreme to build the most expensive solutions, like a nuclear power plant. I don’t know anybody who supports the idea of spending huge amounts of money to bring broadband to a small number of places. Going back to the village in my example, there are a lot of options between a nuclear power plant and fireplaces.

The real problem I have with the term technology neutral is that it says that all broadband technologies are the same, and they clearly are not. Starlink is not equivalent to fiber for a small community. For one thing, fiber can be used for a lot of other purposes that can benefit the community beyond bringing home broadband. Using a euphemism is a way to disguise the real discussion that should be held at State Broadband Offices – what can be afforded for the funding that is available. I think States were mostly doing that, but the shift to the lowest-cost solution ended all logical deliberation.

As we saw in the first BEAD award from Louisiana, which was done under the original BEAD rules, the State still awarded satellite technology for some locations, because that was the most sensible solution for those places. But when the rules got reshuffled to impose technology neutrality, deliberate decisions of the broadband office were replaced with a simple cost comparison.

Where Were the ISPs?

I’ve been doing a lot of thinking about how the BEAD grant program got off track. Even before the current giant swing in rules by NTIA, the program had a lot of problems. One of my observations about the BEAD grant program is that ISPs were not an integral part of developing the grant rules. ISPs were largely ignored from the start and were only brought into the BEAD process after the rules were largely set in concrete.

This is actually not that unusual in the world of grants, but BEAD was supposed to be different. The BEAD legislation required State Broadband Offices to reach out to stakeholders in “every corner of a state” to solicit feedback on what should be accomplished with the BEAD program.

The BEAD process wasn’t just about infrastructure and also included funding that might be used for distributing computers and devices and training people how to use them. It made sense for Broadband Offices to reach out to listen, particularly since many States had newly created Broadband Offices that had recently been created to handle the grants funded by the Capital Project Funds.

I sat through the outreach process in a number of States, and was disappointed when, in many States, there was no listening involved, just Broadband Offices talking about the BEAD timeline. But the real flaw of the outreach program to me was that ISPs were not considered as major stakeholders in this process. For the infrastructure portion of BEAD, ISPs are the only stakeholders that really matter, because they are the ones who will raise the needed matching funds, build, and operate the grant-funded networks.

A lot of the problems encountered in the BEAD process could have been avoided if NTIA and States had asked ISPs upfront what it would take for BEAD to be attractive to them. The first time I read through the legislation, I identified a number of requirements that ISPs were going to hate. In practice, many of the BEAD processes turned out to be even worse than I had feared. For example, the map challenge process, as devised by NTIA, was a total nightmare that had no chance of functioning as intended. States could have done a much better job, and many States already had created their own broadband maps of the areas that needed better broadband. Those efforts were ignored.

I had naively hoped that since BEAD was the first grant program to require public feedback, States would end up loosening the worst of the rules to make the program work. To me, the ideal grant program allows a Broadband Office to waive requirements that are a problem for specific ISPs. The State broadband grants in many states were flexible to make them work.

Unfortunately, any hope that BEAD could work well died when it became clear that States were not going to be given much latitude. From the outset, it quickly became clear that NTIA was not going to be an advisor to State broadband programs. Instead, NTIA dictated practically every aspect of the BEAD rules and process. NTIA left very little to State discretion.

When it’s over, I think the NTIA decision to take full charge of BEAD will ultimately prove to be the fatal flaw of the program. It didn’t have to happen this way. It was clear in the legislation that Congress intended States to develop unique plans for BEAD that worked for each of them. We know what a grant program looks like the federal governments hands over the reins to States. The Capital Projects Fund gave over $9 billion to States to award broadband infrastructure grants. Treasury created some basic rules but largely let States decide how to implement and operate the grant programs. States took a wide variety of approaches to choosing ISPs for the funding. In the end, CPF was a State-directed grant program with only light oversight provided by the federal government. If NTIA had adopted the same philosophy with BEAD, construction would have started for grant-funded projects a few years ago.

Any infrastructure grant program can only be successful if ISPs are willing to participate. State Broadband Offices understand this and were adept at making State grant programs work.

BEAD became so out of kilter that many States ended up with a large number of locations where no ISPs other than Satellite providers made bids. If States had run these programs from the start, they would have found a way to bring local ISPs into the mix. They would have been able to fund a lot of fiber, but would not have hesitated to fund other technologies when that made sense. And they would have accomplished all of the steps required by the legislation in a lot less than four years.

Broadband Shorts October 2025

These are a few topics I found interesting, but which don’t support a full blog.

NTIA BEAD Work to Continue During the Shutdown. We found out that the BEAD and other programs at NTIA were not subject to the government shutdown. NTIA is continuing work on BEAD, the Middle Mile program, the Tribal Broadband Connectivity program, the Broadband Infrastructure Program, and the Connecting Minority Communities program. Overall, NTIA was able to keep 463 of its 600 employees, largely because their work isn’t tied to annual appropriations.

My irony meter instantly went into full swing because NTIA is able to use the same funds allocated to BEAD to keep the federal side of the BEAD program open while the agency is actively working to claw back as much of that same funding as possible from State broadband grants and non-deployment funds.

Rights-of-way Not Permanent? The Georgia Supreme Court rules that local governments can withdraw contracts that granted rights-of-way, by relying on an argument that no contract can last forever, with no end date. This is bad news for telcos, cable companies, electric companies, wireless companies, and the many businesses that rely on maintaining rights-of-way to support long-term infrastructure. This might not mean much beyond the specific case that drew this ruling, but it opens up the possibility of local governments requiring periodic payments to maintain rights-of-way – something that infrastructure owners will be compelled to pay once infrastructure is using the rights-of-way.

Verizon to Buy Starry. Verizon purchased the fixed wireless company Starry, which is an interesting addition to the company’s expansion of wireless broadband. Starry has developed a unique wireless technology that it uses to bring broadband to large MDUs. Starry currently has over 100,000 customers in Boston, Denver, Los Angeles, New York/New Jersey, and Washington, D.C./Virginia.

Starry uses millimeter wave spectrum to reach customers. This fits in well with Verizon’s portfolio of millimeter wave spectrum that it had hoped to use for 5G. That use quickly died when it showed that the spectrum fizzled at street level when connecting to cellphones. Remember all of the Verizon commercials with a cellphone showing gigabit speeds?

FCC to Fast-Track Satellite Expansion. FCC Chairman Brendan Carr announced a push to fast-track satellite applications for expansions or changes to constellations. The process currently requires years of study by the FCC to consider any request from a satellite company. Carr described his planned changes as moving from a ‘Default to No’ process to a ‘Default to Yes’ framework”. He ways this will make the assumption that satellite technologies are in the public interest and should be treated in the same way that the FCC treats other technologies. This might be viewed as a pro-Starlink change, but there are dozens of companies asking for permission to launch satellites.

SpaceX has Chinese Investors. During a lawsuit, it was discovered that SpaceX has Chinese investors, a fact that has never been made public. This instantly raised a lot of questions since SpaceX is becoming increasingly important as a U.S. military contractor.

The extent of the Chinese investments, and the type of Chinese investor, was not disclosed, but it seems certain that this is going to be investigated. SpaceX has always kept its full ownership private, and that will likely have to change if it to wants to keep the role of defense contractor.

Who Will Still Need Broadband After BEAD?

A question I’ve been asked lately is what comes after BEAD. While BEAD will build good broadband networks in a lot of rural communities, it’s becoming clear that BEAD is not going to solve a lot of the rural broadband gap. I’ve identified categories of locations that will still need better broadband after BEAD.

BEAD Satellite Awards. I start with the premise that rural communities are not going to be happy when somebody officially tells them that the federal government is giving money to Starlink or Kuiper to solve their rural broadband gap. It’s likely that NTIA and the FCC will declare that satellite is good broadband so that they can declare that the rural broadband gap has been solved.

There are also natural limitations on the capabilities of satellite broadband. It can be difficult to deliver a satellite signal through heavy tree canopy. The signal can be blocked for customers living in the shadow of hills or mountains. There are a lot of questions about the maximum number of customers that can be served simultaneously in a given geography. But the real ongoing question will be if people and local politicians will accept satellite broadband when neighboring counties have fiber in rural places. There is also a big question of affordability.

I predict there will be a growing outcry from people from areas that got satellite from BEAD who will not accept satellite as the permanent solution.

Defaults. There will continue to be defaults for existing broadband grant programs. This year saw significant RDOF defaults from Charter and CenturyLink. There will be defaults on networks funded by ARPA grants, where funding ends at the end of 2026.

I expect BEAD defaults. When NTIA took the approach of forcing ISPs to accept less funding, many of those ISPs will realize in the future that they don’t have enough money to build the promised network.

Crappy Mapping. The biggest group of locations missed by BEAD will be due to poor FCC maps. The BEAD map challenge was a total joke. It was fairly easy for ISPs to get BEAD-eligible locations removed from the map, including many that should have stayed on. The map challenge made it practically impossible to add locations to the BEAD map where the FCC maps were in error. There are two major flaws in the FCC maps that will surface as people complain about still not having adequate broadband.

There are still numerous examples of locations that are not identified on the FCC maps. I recently talked to a cooperative in Appalachia that said there were neighboring areas where the FCC fabric missed 30% of the eligible locations. This is understandable because CostQuest relies on two primary sources of data on housing: local records and satellite images. There are many counties that still have poor records. Satellite images don’t do well in areas with total tree cover that hides roads and houses from the satellite imagery.

The bigger mapping issue is ISPs that have claimed speeds of 100/20 Mbps or faster in the FCC maps but can’t deliver that speed. FCC rules allow ISPs to report marketing speeds rather than an approximation of actual speeds, so such ISPs are probably not violating any FCC rules. But while fully knowing that marketing speeds are likely exaggerated, in the grant process, we pretend that the speeds reported in the FCC maps are gospel. When the RDOF subsidy program was announced, which was to provide a subsidy to locations where speeds were less than 25/3 Mbps, the large rural telcos flooded the FCC mapping process with claims that upgraded the claimed speeds of huge numbers of locations to exactly 25/3 Mbps broadband. The FCC rejected a lot of these claims that were made on the eve of the RDOF reverse auction. When BEAD rules dictated that grants could only be made to locations where broadband speeds were less than 100/20 Mbps, many rural ISPs scrambled to claim that they could deliver exactly 100/20 Mbps.

ISPs also often overstate coverage areas in the FCC maps. An ISP is only supposed to claim locations it can connect to within ten days after a request. There are many examples of WISPs in the FCC maps that draw perfect coverage circles around a tower that ignore topography and foliage. There are many other ISPs that claim service areas that are aspirational rather than real.

The bottom line is that we will still be a long way from being able to declare the job done after the BEAD awards. To be fair, BEAD, ReConnect, ARPA, and other grants have made some huge dents in the rural broadband gap. But the day will come when the millions of people who have been left behind will make themselves heard.

NTIA’s BEAD Role

At the SCTE Tech Expo in Washington, DC, Arielle Roth, the newly seated head of NTIA, was quoted by several sources as saying, “Our role is to be good stewards of the money . . . We wouldn’t be doing our due diligence if we didn’t look under the hood and make sure that Americans aren’t on the hook for costs that would be unreasonable.”

By the looks of what NTIA has been doing, they seem to have taken cost-cutting as the primary goal of the BEAD program. First, they forced States to shave millions of locations from the BEAD-eligible list, and I believe we’re going to find out later that many millions of those locations should have gotten grants for better broadband. NTIA is now in the process of setting a cost cap for each state based on the CostQuest cost models and forcing ISPs to accept 65% or less of the state-specific cost cap.

I would agree that NTIA has a responsibility to make sure that money isn’t wasted, but that is not supposed to be its primary concern. Let me take you back to the beginning of BEAD to talk about how this was supposed to work.

Congress clearly intended for the full $45.5 billion allocated to BEAD to be spent. States were instructed to bring good broadband to every BEAD-eligible location, and the legislation included an emphasis on building fiber. Whatever wasn’t spent on infrastructure was to be used for non-deployment projects that were broadband-related. This could have encompassed a wide variety of different uses to be determined by each state. The legislation suggested uses for non-deployment funds for things like wiring urban MDUs for broadband and getting computers and other devices into the hands of those who need them. States have suggested a wide range of uses for non-deployment funds. For example, West Virginia wanted to use the funds to do a statewide pole inventory to make it easier to build fiber. South Carolina envisioned creating a statewide middle-mile network that made sure that ISPs in every rural county could buy backbone Internet for the same price as in the populous counties.

Unfortunately, NTIA got off to a bad start early when it realized how bad the FCC maps were. The whole BEAD process was delayed waiting for better maps. When they got slightly better maps, NTIA pulled the trigger and used those maps to allocate BEAD funds to states. Almost immediately, some states yelled that they didn’t get enough money, while other states realized they got more than they needed. There were policy discussions about shifting money between states after awards were made, but that never happened.

The States then went through a map challenge process. Unfortunately, the rules required by NTIA made it far easier to remove BEAD-eligible locations from the map than to add locations that should have been eligible. I know multiple counties that worked hard to show that some of the ISPs in their County were not delivering 100/20 Mbps. However, the process for proving that was nearly impossible to follow – it required convincing multiple customers of a given ISP to take speed tests multiple times per day over multiple days, and in a specific manner. The end result of the disastrous map challenge process was that millions of locations were removed from BEAD, with relatively few added.

More recently, NTIA acted to remove even more locations from BEAD. They correctly removed locations where some other grant was supposed to build better broadband. But they also made it easier for WISPs, using both licensed and unlicensed spectrum, to ask to remove locations from the BEAD map.

States were originally given a lot of latitude in how to use the funding allocated to them. But States were to act under the overarching intentions of the legislation that said they should consider fiber first. States understood that by funding relatively expensive fiber builds, they were reducing the funds that would be left for non-deployment. States had serious policy discussions of how to balance between building fiber and other needs.

But this latitude is exactly what Congress intended. They wanted BEAD to avoid the problems of RDOF, where the FCC called the shots and ended up awarding money to ISPs that should not have been funded. That draws attention to a second quote from Roth. She said that BEAD funding should go to “serious providers who are going to deliver on their promises and that we’re not going to see defaults.” I hate to be the bearer of bad news to NTIA, but by pressuring ISPs to take less grant funding to stay in BEAD, NTIA is greatly increasing the chance of future defaults. This is going to be a repeat of RDOF. ISPs will start building networks and will suffer inflation and supply chain issues, and some of them will decide that it’s better to pull the plug than to finish building a project they can’t afford, and that can’t make money. That’s the reason for the RDOF defaults in recent years – RDOF winners looked at the low amounts of award they accepted in the reverse auction and threw in the towel.

One thing is now clear with BEAD – NTIA now fully owns the program. States lost all of their latitude with BEAD, and the NTIA changed the rules after the BEAD process made it to the five-yard line. Whatever happens from here will be laid 100% at the doorstep of NTIA, and my prediction is that BEAD is not going to be talked about fondly in many parts of the country.

BEAD Cost Caps

Most States have now sent final BEAD proposals to NTIA with a list of the proposed ISPs to win BEAD funding for every eligible location. The next step is for NTIA to review grant applications, which is now underway. The agency has already been contacting States and establishing a cost cap for each State based on the CostQuest cost models.

Several States have reported that NTIA is instructing the State to outright reject any proposed award that is more than 85% of the cost cap. States are to ask any ISP with a proposed BEAD cost between 65% and 85% of the cost cap to lower the BEAD award to 65% or else default the grant. Any proposed BEAD award below 65% of the cost cap is apparently safe for now. This may not be the last step, and NTIA has set a deadline for itself for December 4 to review all grant awards.

The current process is clearly aimed at lowering the amount of funding awarded by BEAD. The Benefit of the Bargain round of BEAD grants has already drastically lowered the amount of BEAD grants. For the States that have reported to NTIA when I wrote this blog, States have awarded $16.1 billion for grants, and those same States are not spending $17.9 billion of unassigned funding. We have no way of knowing NTIA’s motivation – is this purely to save federal grant monies or to give more money to satellite.

I understand the desire to save federal grant money. However, Congress created the $42.5 billion BEAD program with rules intended to spend all of the funding, either for infrastructure grants or for broadband-related uses. With the current awards, almost 53% of the funding will go unspent, and that percentage will climb as States implement the cost thresholds.

There are several reasons why using CostQuest cost studies to establish the cost caps doesn’t make much sense. By definition, a huge percentage of BEAD locations are more costly to reach with a wired technology than the average cost to reach everywhere in a State. I would hope NTIA took that into consideration when setting the cost caps.

Statewide averages costs don’t make sense for states that have a wide range of topology and household density. I look at my own state of North Carolina, which goes from the ocean coast, through urban centers, into the Piedmont hills, and finally into Appalachia. I remember when Minnesota used average costs from the CostQuest models as a way to validate the magnitude of grant requests. The State calculated a different average cost for each County, which makes a lot more sense than applying a single cost cap for a whole state.

There is another issue that might be the most important reason why it makes no sense to look at CostQuest model numbers. In most places in the country, the BEAD location map is comprised of a mixture of BEAD-eligible locations and locations that either have good broadband or are supposed to get it. There are myriad examples where a BEAD eligible-location sits next door to one that is not eligible. In many cases, this hodgepodge represents an error in broadband mapping more than any reality in the real world – but that is a topic for another blog.

Picture having to build into a small rural neighborhood where only half of the homes are BEAD eligible. This results in a cost per passing that is likely almost double what it would be if every location were BEAD-eligible. This situation is found all over the BEAD map, everywhere I’ve looked. The folks who designed BEAD understood this because it was widely publicized how RDOF awards had carved up the broadband landscape into Swiss cheese rather than into contiguous grant areas.

All of these reasons mean that applying a single statewide cost cap to judge BEAD locations  is nothing more than an exercise to lower grant spending. I’m just speculating, but this seems to be a tool to get the broadband office to cancel grants rather than NTIA having to be the heavy. What’s clear is that the bottom-line result of applying a cost caps will mean a lot more locations awarded to satellite or other low-cost technologies.

Going, Going, Gone?

We now know the next BEAD fight, and it might be the biggest fight yet. On September 5, NTIA issued a press release talking about the progress of the Benefit of the Bargain round for States to award BEAD funding. The press release announced that 36 of 56 States and Territories have made tentative BEAD awards and have submitted their final proposals to NTIA.

The header of the Press Release is that “Plans include broad range of technologies and save American taxpayers at least $13 billion”. The Press Release went on to say, “In the plans submitted today, states are already projecting savings of at least $13 billion for American taxpayers”.

The $13 million referenced by NTIA is the difference between the funding allocated to each state for BEAD and the amount being awarded to BEAD grants. According to the IIJA legislation that created BEAD, any funds not spent on infrastructure were to remain with the States to pursue other activities related to improving broadband. The legislation included some specific examples related to activities that promote the adoption and meaningful use of high-speed internet, including workforce development, digital literacy training, subsidies for internet-capable devices, telehealth initiatives, and the installation of Wi-Fi in multi-unit residential buildings. States were free to propose other ideas, and many have.

When NTIA issued the new rules for making BEAD grants in June, the agency said that funding for non-deployment funds was under review. It’s now pretty clear that NTIA plans not to expend the non-deployment funds and take credit for saving the expenditure for the U.S. Treasury.

The $13 billion number will grow. That amount comes from the States that have already submitted final plans. If the same ratio of non-deployment funds holds for the remaining states, then the amount of non-deployment will be around $25 billion. There are ten States where the non-deployment funds are more than $500 million, led by North Carolina at $1.1 billion and Georgia at $1 billion. The others include Arkansas, Kentucky, Louisiana, Mississippi, Ohio, Tennessee, Virginia, and West Virginia. Interestingly, the amount of non-deployment funding grew significntly when NTIS stressed making BEAD awards to satellite technology.

I describe this as a fight because States aren’t going to easily let this funding go. First, States have worked hard to reach consensus for specific plans for using the non-deployment funds. As an example, West Virginia plans to use non-deployment funds to create a database of utility poles in the state, to update security on the State’s own network, to award grants for expanding rural cell towers, and for training programs for technical jobs in the telecom sector. These are typical of the plans in other States and all work to further broadband deployment.

States are also unhappy about the NTIA statement because the funds were directed by Congress, and States believe they are entitled to the non-deployment funds. Louisiana Gov. Jeff Landry sent a letter to Commerce Secretary Howard Lutnick this week that emphasized that the non-deployment funds belong to the State. In Louisiana, the non-deployment funds are in the range of $850 million.

It’s not hard to imagine a coalition of State Attorneys General from red and blue states together suing NTIA to get the non-deployment funds. There are similar lawsuits underway for withheld funding for healthcare and education.

The bottom line is that a lawsuit might be inevitable. NTIA statements make it clear that it wants to claim the savings by keeping the non-deployment funds, and there are States that are likely not going to let the funds go without a fight. But maybe there is a compromise somewhere in the middle.